Question

2. Types of financial markets Aa Aa Finandial markets across economies involve various kinds of particpants and trade various types of assets and securities. It is important to understand the kinds of markets in which financial transactions take place. You are preparing to take an examin your finance class, and you've been making flash cards on different markets and transactions. Indicate the markets in which each of the following transactions will be traded: Description of Transaction Type of Market Karl spends $1,5DD to buy Google stock options through his online brokerage account. Description of Transaction Type of Market Carlos is an immigrant from Mexico to the United States. He sends $20D to Mexico on June 15 at the exchange rate on that day. Description of Transaction Type of Market Sheila saves $10,000 and buys a certificate of deposit (CD) that will mature in six months. Description of Transaction Type of Market An investor holding 3,00D shares of stock of Strata Corp. sells them to anather investor. A hedge fund purchased credit default swaps on securities it did not own because it believed that the securities were likely to default In this example, the hedge fund is

dropdown options

1. financial asset physical asset

2. spot market future market

3. capital market, money market

4. primary market, secondary market

fill in the blank options: speculating, hedging

Answer 1

ANSWER : 1 : FINANCIAL ASSET

ANY ASSET IN THE FORM OF SHARES, STOCKS, BONDS, DERIVATIVES ARE FINANCIAL ASSETS. PHYSICAL ASSETS ARE LAND, BUILDING, PLANT ETC

ANSWER : 2 : SPOT MARKET

WHEN YOU PAY USING THE RATE ON THE CURRENT DAY, IT IS A SPOT RATE

ANSWER 3 : MONEY MARKET

CERTIFICATE OF DEPOSIT IS A MONEY MARKET INSTRUMENT

ANSWER 4 : SECONDARY MARKET

WHEN THE SHARES ARE EXCHANGED BETWEEN INVESTORS, IT IS SECONDARY MARKET

WHEN SHARES ARE ISSUED BY A COMPANY TO THE PROSPECTIVE OR EXISTING SHAREHOLDERS, THEN IT IS TERMED AS PRIMARY MARKET

FILL IN BLANK : SPECULATING

AS FUND DOES NOT OWN IT. (THUMBS UP PLEASE)